ACNB Corporation
Annual Report 2013

Plain-text annual report

2013 ANNUAL REVIEW NEW HORIZONS BECKON. TA B LE O F CO NTE NT S Shareholder Information . . . . . . . . . . . . . . . . . . . . . 1 Consolidated Statements of Income . . . . . . . . . . 9 Business Profile . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Boards of Directors . . . . . . . . . . . . . . . . . . . . . . . . 10 Financial Highlights . . . . . . . . . . . . . . . . . . . . . . . . . 2 Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11 Report to Shareholders . . . . . . . . . . . . . . . . . . . . . 3 Office Locations . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Five-Year Financial Overview. . . . . . . . . . . . . . . . . 6 Contact Information . . . . . . . . . . . . . . . . . . . . . . . . 12 Consolidated Statements of Condition . . . . . . . . 8 S H A R E H O LD E R I N FO R M ATI O N Annual Meeting The 2014 Annual Meeting of Shareholders for ACNB Corporation will be held on Tuesday, May 6, at 1:00 p.m. at the ACNB Corporation Operations Center, 100 V-Twin Drive, Gettysburg, PA. All proxy and other materials for the Annual Meeting are available on the Internet at acnb.com under ACNB Corporation Investor Relations. Stock Listing ACNB Corporation common stock is listed and traded on The NASDAQ Capital Market under the symbol ACNB. Annual Report on Form 10-K A copy of ACNB Corporation’s Annual Report on Form 10-K, as filed with the Securities and Exchange Commission, may be obtained, without charge, by contacting: Lynda L. Glass Executive Vice President, Secretary & Chief Governance Officer ACNB Corporation PO Box 3129 Gettysburg, PA 17325 717.339.5085 The Annual Report and other Corporation reports are also filed electronically with the Securities and Exchange Commission and are accessible by the public on the Internet at www.sec.gov/ edgar.shtml. Transfer Agent, Registrar and Dividend Disbursing Agent Registrar and Transfer Company 10 Commerce Drive Cranford, NJ 07016 www.rtco.com shareholder inquiries or For information regarding the ACNB Corporation Dividend Reinvestment and Stock Purchase Plan, call Registrar and Transfer Company toll free at 1.800.368.5948. Market Makers Boenning & Scattergood, Inc. West Conshohocken, PA 610.832.1212/1.800.883.1212 Janney Montgomery Scott LLC York, PA 717.779.2720/1.800.999.0503 Local Broker Wells Fargo Advisors, LLC Hanover, PA 717.637.3817/1.800.242.1331 2 01 3 A N N UA L R E V I E W | 1 B U S I N E S S P RO FI LE ACNB Corporation, headquartered in Gettysburg, PA, is the financial holding company for the wholly- owned subsidiaries of ACNB Bank, Gettysburg, PA, and Russell Insurance Group, Inc., Westminster, MD. Through its banking subsidiary of ACNB Bank, Chambersburg, Franklin County, PA, with plans ACNB Corporation provides a wide array of for a new retail banking office in this community consumer, commercial and fiduciary services to opening in 2014. fulfill the financial needs of individuals, businesses, public entities, and community organizations in Russell Insurance Group, Inc., the insurance its trading area. Originally founded in 1857, ACNB subsidiary of ACNB Corporation, offers a broad Bank serves its marketplace as of December 31, range of commercial and personal insurance lines 2013, via a network of 19 retail banking offices through licenses in 36 states, including Maryland located throughout Adams County, PA, as well and Pennsylvania. This full-service insurance as in Dillsburg, Hanover and Spring Grove, York agency has office locations in Westminster, County, PA, and in Newville, Cumberland County, Carroll County, MD, and Germantown, PA. In addition, the Bank operates a loan office in Montgomery County, MD. FI N A N C IA L H I G H LI G HT S For the Year Net interest income Net income Cash dividends paid Per Share Statistics Basic earnings Cash dividends paid Book value (year-end) At Year-End Total assets Total loans Total deposits Total stockholders’ equity 2013 $33,612,000 9,315,000 4,542,000 2012 $34,344,000 8,886,000 4,524,000 2011 $34,370,000 8,502,000 4,512,000 $ 1.56 0.76 17.83 $ 1.49 0.76 16.98 $ 1.43 0.76 16.39 $1,046,047,000 $1,049,995,000 $1,004,823,000 694,468,000 782,795,000 97,474,000 728,648,000 800,643,000 106,802,000 708,136,000 834,176,000 101,264,000 Key Ratios Return on average assets Return on average equity Dividend payout Average stockholders’ equity to average assets 0.90% 9.00% 48.76% 9.95% 0.86% 8.91% 50.91% 9.61% 0.85% 8.80% 53.15% 9.72% 2 | N E W H O R IZO N S B EC KO N R E P O R T TO S H A R E H O LD E R S New horizons beckon as ACNB Corporation sees a strengthening business environment after more than five years of economic uncertainty and industry difficulties. Throughout the recession, ACNB Corporation managed towards the future. The focus remained on ensuring safety and soundness, building capital, enhancing asset quality, and applying the necessary resources to lay the foundation for growth. Now there are signs of recovery, mixed with a sense of caution, in the economic outlook. The Corporation and its wholly-owned subsidiaries of ACNB Bank and Russell Insurance Group, Inc. see new horizons in our geographic footprint and in our product and services offering and delivery. ACNB Corporation Financial Performance ACNB Corporation’s net income advanced year over year, as it has since 2008 at the beginning of the economic recession. For the year ended December 31, 2013, net income was $9,315,000, or $1.56 per share. In comparison to 2012, this is an increase of $429,000, or 5%. Net income for the year ended December 31, 2012, was $8,886,000, or $1.49 per share. Net interest income is the most significant component of the Corporation’s net income. It is income derived from the interest earned on loans and investments, less the interest paid on deposits and borrowings, through the Corporation’s banking subsidiary, ACNB Bank. ACNB Corporation reported $33,612,000 in net interest income for the year ended December 31, 2013, compared to $34,344,000 for the year ended December 31, 2012. As interest rates remain at historically low levels with deposit interest rates at practical floors, the challenge is to minimize the impact of net interest margin compression by increasing the volume of loans and, thus, the level of interest income, while controlling interest expense. The Corporation’s net interest margin declined to 3.48% for 2013 from 3.56% for 2012. However, stronger loan growth towards the end of 2013 helped to offset some of the impact of lower yields on loans during the year. In 2013, $1,450,000 was provisioned to fund and fortify the allowance for loan losses, which is the reserve set aside for potential loan losses in the future. This dollar amount was reduced from the $4,675,000 charged against earnings in 2012 as the Corporation adjusted the provision expense to reflect current conditions in the loan portfolio and to maintain the allowance for loan losses at a level deemed to meet the risk characteristics of the loan portfolio. As in prior years, asset quality remains a management focus at the banking subsidiary due to the slow economic recovery and the elevated level of non-performing assets relative to years prior to the recession. At year- end 2013 and 2012, a key credit quality metric of the ratio of non-performing loans to total loans was 1.44% and 1.00%, respectively, and though higher in 2013 remains consistent with or lower than peers in the industry. Further, the allowance for loan losses stood at $16,091,000 at year-end 2013, in comparison to $16,825,000 at year- end 2012. The resulting ratio of the allowance for loan losses to total loans was 2.21% as of December 31, 2013, and the coverage ratio of the allowance for loan losses to non-performing loans was 153.26% as of this same date. Both of these ratios are strong and firmly exceed those of peers. The Corporation’s return on average assets was improved year over year at 0.90% for 2013, compared to 0.86% for 2012. The return on average equity advanced to 9.00% for 2013 from 8.91% for 2012, even given the rise in stockholders’ equity during 2013. And, the ratio of average stockholders’ equity to average assets rose to 9.95% at year-end 2013, as compared to 9.61% at year-end 2012. 2 01 3 A N N UA L R E V I E W | 3 ACNB Corporation’s assets remained stable at $1.046 billion and $1.050 billion as measured on December 31, 2013 and 2012, respectively. Total deposits decreased by more than $33 million, or 4%, year over year to $801 million at year- end 2013 due primarily to ongoing low interest rates on certificates of deposit and higher returns in the equities market. Total loans rose by nearly $21 million, or 3%, to $729 million at December 31, 2013, which is significant given the volume of loans in the portfolio that paid down or paid off throughout the year. And, very importantly, a 5% rise in stockholders’ equity resulted in an aggregate of $107 million at year- end 2013, in comparison to $101 million at the end of the prior year. Dividends to Shareholders Once again, our shareholders benefited from the Corporation’s financial performance in 2013 as ACNB Corporation furthered its long history of paying dividends to its shareholders. A cash dividend of $0.19 per share was paid in each quarter of 2013. In total, $4,542,000, or $0.76 per share, was approved by the ACNB Corporation Board of Directors and paid to shareholders in 2013 for a dividend payout ratio of 48.76%. This is a meaningful indication of our strength and soundness, as well as our commitment to generating value for those who own the shares of ACNB Corporation. The ACNB Corporation Dividend Reinvestment and Stock Purchase Plan offers registered shareholders to purchase the opportunity additional shares of the Corporation’s common stock through the automatic reinvestment of cash dividends and voluntary cash payments on a quarterly basis. The benefit to the registered shareholders who elect to participate in the plan includes the convenience of the acquisition of additional shares of ACNB Corporation common stock, as well as the ability to do so without paying service fees or brokerage commissions. Since the plan’s introduction in January 2011, 62,968 new shares of ACNB Corporation common stock have been issued to plan participants as a result of both dividend reinvestment and voluntary cash purchases. 4 | N E W H O R IZO N S B EC KO N ACNB Bank ACNB Bank is the primary driver of revenues and profit at ACNB Corporation. This source of strength is founded upon a history of independence and growth for more than 155 years. Today, ACNB Bank serves communities throughout Adams County, Pennsylvania, as well as in York, Cumberland and Franklin Counties, Pennsylvania, with a network of 19 retail banking offices and a loan production office. In December 2013, the major expansion project at the Bank’s North Hanover Office was nearly complete with the consolidation of the commercial and residential mortgage lending staff and a trust officer under the same roof as the retail banking staff in this York County location. This same month, the Bank celebrated with a groundbreaking ceremony for the new retail banking office at 850 Norland Avenue, Chambersburg, in the Franklin County market. It has always been the Bank’s mission to reinvest depositors’ dollars in loans to others in our communities. This endeavor occurs every business day at ACNB Bank with the continued goal of increasing loan growth in local markets, while maintaining a reasonable funding base by offering competitive deposit products and services. In 2013, asset quality was again a high priority due to economic conditions and the financial impact on the Bank’s borrowers. The risk in the Bank’s loan portfolio is carefully managed and monitored based upon prudent underwriting and review standards for the protection of depositors and shareholders alike. The offering and delivery of banking services to its customers is evolving with consumer demand for multiple channels and adoption of digital banking by customers of varied demographics. Coupled with the growth of smartphones and tablets for use in day-to-day activities, the expansion of online and mobile banking continues as persons experience an increasing comfort level with technology as well as value anytime and anywhere convenience. From the Bank’s point of view, this expansion also applies to online communications and marketing —a focus initiated in 2013 with further development and execution planned for 2014. Today’s banking and regulatory environments necessitate an emphasis on capital as the basis of organizational strength and sustainability. At ACNB Bank, the primary capital ratios were further enhanced and fortified in 2013. The total risk-based capital ratio at year-end 2013 was 14.26%, exceeding the 10.00% requirement to be well capitalized under banking regulations. At the end of 2012, this ratio was 14.07%. Improvement in the capital position of the Bank is predominantly a function of retained earnings, which is the amount of net income after the payment of dividends to the Corporation for issuance to ACNB Corporation shareholders. Trust & Investment Services fiduciary, investment and ACNB Bank’s Trust & Investment Services staff provides related services to clients. Income from this business segment totaled $1,299,000 for 2013, and assets under management exceeded $150 million at December 31, 2013. Looking forward, Trust & Investment Services is focused on expanding its client base geographically, beyond its Gettysburg base, and via new products and services. One step in this direction was the successful introduction of the ACNB Portfolio Builder account in January 2013, which attracted new client relationships to this business line of the Bank. This new investment option, based upon a limited mutual fund asset allocation model, features a lower minimum account balance of $50,000, lower cost, personalized planning, daily access, and local expert advice. Russell Insurance Group, Inc. in 2005, Inc. was acquired The insurance subsidiary of Russell Insurance Group, is headquartered in Westminster, Maryland, and is led by Frank C. Russell, Jr. who founded the full- service insurance agency in 1978. The weakness in economic conditions and the financial markets in recent years had a dampening effect on the insurance industry resulting in lower premiums and, therefore, lower revenues. Today, Russell Insurance Group still faces the challenges of heightened competition, especially in the commercial lines of business, and a reduced overall commission structure. Given these pressures, commissions from insurance sales decreased to $4,671,000 for the year ended December 31, 2013, from $4,835,000 for the year ended December 31, 2012. In Closing 2013 was a year of continued diligence and discipline in managing our business at ACNB Corporation, but always with an eye towards the long-term horizon. The hard work, dedication and talent of the more than 300 people who work with us ensure our success. Looking ahead, we are focused on the future and its opportunities to grow and expand. Your financial investment, as shareholders of ACNB Corporation, is integral to our vision. Thank you for your confidence in our future as new horizons beckon. Sincerely, Frank Elsner, III Chairman of the Board Thomas A. Ritter President & Chief Executive Officer Lynda L. Glass Executive Vice President, Secretary & Chief Governance Officer David W. Cathell Executive Vice President, Treasurer & Chief Financial Officer 2 01 3 A N N UA L R E V I E W | 5 FIV E -Y E A R FI N A N C IA L OV E RV I E W Total Assets In millions of dollars Total Deposits In millions of dollars $961.9 $968.7 $1,004.8 $1,050.0 $1,046.0 $728.5 $746.5 $782.8 $834.2 $800.6 2009 2010 2011 2012 2013 2009 2010 2011 2012 2013 Total Loans In millions of dollars Total Stockholders’ Equity In millions of dollars $644.7 $665.3 $694.5 $708.1 $728.6 $88.3 $93.8 $97.5 $101.3 $106.8 2009 2010 2011 2012 2013 2009 2010 2011 2012 2013 Net Income In millions of dollars Earnings Per Share In dollars $7.2 $8.4 $8.5 $8.9 $9.3 $1.22 $1.42 $1.43 $1.49 $1.56 2009 2010 2011 2012 2013 2009 2010 2011 2012 2013 6 | N E W H O R IZO N S B EC KO N Return on Average Assets Percent Return on Average Equity Percent 0.75% 0.86% 0.85% 0.86% 0.90% 8.34% 9.15% 8.80% 8.91% 9.00% 2009 2010 2011 2012 2013 2009 2010 2011 2012 2013 Cash Dividends Paid Per Share In dollars Book Value Per Share In dollars $0.76 $0.76 $0.76 $0.76 $0.76 $14.90 $15.81 $16.39 $16.98 $17.83 2009 2010 2011 2012 2013 2009 2010 2011 2012 2013 2 01 3 A N N UA L R E V I E W | 7 CO N SO LI DATE D S TATE M E NT S O F CO N D ITI O N Dollars in thousands, except per share data Assets Cash and due from banks Interest bearing deposits with banks Cash and Cash Equivalents Securities available for sale Securities held to maturity (fair value $92,082 in 2013 and $50,980 in 2012) Loans held for sale Loans, net of allowance for loan losses ($16,091 in 2013 and $16,825 in 2012) Premises and equipment Restricted investment in bank stocks Investment in bank-owned life insurance Investments in low-income housing partnerships Goodwill Intangible assets Foreclosed assets held for resale Other assets TOTAL ASSETS Liabilities Deposits: Non-interest bearing Interest bearing Total Deposits Short-term borrowings Long-term borrowings Other liabilities TOTAL LIABILITIES Stockholders’ Equity Preferred stock (par value $2.50; 20,000,000 shares authorized; no shares outstanding) Common stock (par value $2.50; 20,000,000 shares authorized; 6,053,911 and 6,027,968 shares issued in 2013 and 2012, respectively; 5,991,311 and 5,965,368 shares outstanding in 2013 and 2012, respectively) Treasury stock, at cost (62,600 shares in 2013 and 2012) Additional paid-in capital Retained earnings Accumulated other comprehensive income (loss) TOTAL STOCKHOLDERS’ EQUITY TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY December 31 2013 2012 $ 1 3 ,963 $ 1 9 ,078 3 2 ,307 4 , 1 53 5 1 ,385 1 8 , 1 1 6 1 65 ,790 1 2 9 ,983 50 , 1 59 94 ,373 6 ,687 496 69 1 ,3 1 1 7 1 2 ,55 7 1 5 , 1 3 1 1 5 ,99 1 5 , 3 1 8 6 ,86 1 3 1 , 1 2 2 32 ,23 7 5 ,440 4 ,6 87 6 ,308 6 ,308 2 ,409 1 ,845 4 ,24 7 1 ,762 20 ,83 1 1 4 ,688 $ 1 046 ,047 $ 1 049 , 995 , , $ 1 2 8 ,0 1 1 $ 1 1 9, 297 7 1 4, 879 6 72 ,632 834, 1 76 800 ,643 49 ,052 82 ,703 6 ,847 939 ,245 47, 303 5 9, 954 7, 298 948, 7 3 1 — — 1 5,070 1 5 ,1 3 5 ( ) ) ( 7 2 8 7 2 8 9 ,628 9,246 77,888 82 ,66 1 ( ) 2 1 2 1 06 1 06 ,802 1 0 1 , 2 64 $1 046 ,047 $1 049, 9 9 5 , , See the consolidated financial statements and accompanying notes presented in the Corporation’s Annual Report on Form 10-K. 8 | N E W H O R IZO N S B EC KO N CO N SO LI DATE D S TATE M E NT S O F I N CO M E Dollars in thousands, except per share data Interest Income Loans, including fees Securities: Taxable Tax-exempt Dividends Other TOTAL INTEREST INCOME Interest Expense Years Ended December 31 2013 2012 2011 $32,084 $33,990 $ 34,493 4, 2 30 1, 1 97 2 2 6 8 3 7,6 0 1 4,8 7 6 1 ,45 7 2 7 89 40,43 9 6 ,006 1 ,25 2 1 3 68 4 1 ,832 Deposits Short-term borrowings Long-term borrowings TOTAL INTEREST EXPENSE NET INTEREST INCOME PROVISION FOR LOAN LOSSES NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 2, 1 7 7 6 1 1 , 7 5 1 3,9 89 33,6 1 2 1 ,4 50 32, 1 6 2 3 ,44 1 76 2,5 7 8 6,095 34,344 4,6 7 5 29,66 9 4, 457 9 1 2 , 9 1 4 7 , 462 34, 370 5 , 435 28, 935 Other Income Service charges on deposit accounts Income from fiduciary activities Earnings on investment in bank-owned life insurance Gain on life insurance proceeds Gains on sales or calls of securities Service charges on ATM and debit card transactions Commissions from insurance sales Other TOTAL OTHER INCOME Other Expenses Salaries and employee benefits Net occupancy Equipment Professional services Other tax Supplies and postage Marketing and corporate relations FDIC and regulatory Intangible assets amortization Foreclosed real estate expense (income) Other operating TOTAL OTHER EXPENSES INCOME BEFORE INCOME TAXES PROVISION FOR INCOME TAXES NET INCOME Per Share Data Basic earnings Cash dividends paid 2,2 46 1,2 99 9 7 5 — — 1 ,4 34 4,6 7 1 1 ,0 78 1 1 , 7 03 2 ,43 3 1 ,2 2 4 98 1 6 3 7 1 ,2 9 1 4,8 3 5 1 ,03 3 1 1 ,86 7 2 ,4 1 8 1, 396 968 — 1 1 , 2 36 4,824 894 1 1 , 7 37 1 8,9 50 1 ,9 5 7 2,8 26 8 95 90 1 5 8 3 3 96 7 68 6 4 1 5 76 3,5 2 2 32,0 1 5 1 1 ,8 50 2,5 35 $ 9, 3 1 5 1 8,5 5 3 1 , 95 2 2 ,5 3 7 8 2 5 8 3 3 63 4 3 7 2 84 3 64 1 ( ) 1 1 9 3 ,2 60 30, 3 3 1 1 1 , 205 2 ,3 1 9 $ 8 ,88 6 1 7 , 1 38 2 ,043 2 ,620 9 1 1 803 640 478 1 ,026 64 1 725 2 , 99 1 30,0 1 6 1 0,656 2 , 1 54 $ 8 ,502 $ 1.56 $ 0.76 $ 1.4 9 $ $ 0.76 1.43 $ 0.76 2 01 3 A N N UA L R E V I E W | 9 B OA R DS O F D I R EC TO R S ACNB Corporation and ACNB Bank Boards of Directors Frank Elsner, III Owner & Managing Director Donna M. Newell President & Chief Thomas A. Ritter President & Chief Alan J. Stock Owner ODT Global, LLC Executive Officer Executive Officer Eicholtz Company Chairman of the Board NTM Engineering, Inc. ACNB Corporation Vice Chairman ACNB Corporation and ACNB Bank Scott L. Kelley, Esquire President Stonesifer and Kelley, P.C. James J. Lott President J. Emmett Patterson President & Owner JDCS Enterprise Daniel W. Potts Director of Business Development and ACNB Bank Marian B. Schultz Retired Dean Shippensburg University David L. Sites Owner & Managing Partner Global Financial Services Realty Leasing & Bonnie Brae Fruit Farms, Inc. Capgemini Management Co. ACNB Corporation and ACNB Bank Harry L. Wheeler Retired Proprietor Wheeler Drywall James E. Williams President C.E. Williams Sons, Inc. Robert W. Miller Vice President Miller, Brown, Ohm & Associates, P.C. ACNB Bank Honorary Directors Dana P. Brandt J. Thomas Derick Frank C. Egger Richard L. Galusha William B. Lower Mervin J. Morrison W. Irvin Nelson Ralph S. Sandoe L. Robert Snyder Russell Insurance Group, Inc. Board of Directors Frank Elsner, III Lynda L. Glass Daniel W. Potts Thomas A. Ritter Frank C. Russell, Jr. 1 0 | N E W H O R IZO N S B EC KO N O FFI C E R S ACNB Corporation Frank Elsner, III Chairman of the Board Thomas A. Ritter President & Lynda L. Glass Executive Vice President, David W. Cathell Executive Vice President, Chief Executive Officer Secretary & Treasurer & Chief Governance Officer Chief Financial Officer ACNB Bank Frank Elsner, III Chairman of the Board Lynda L. Glass Executive Vice President, Laurie A. Laub Senior Vice President & Douglas A. Seibel Senior Vice President Secretary & Chief Risk Officer James P. Helt Executive Vice President Banking Services Sandra A. Deaner Senior Vice President Human Resources Chief Credit Officer Commercial Lending Dorothy K. Puhl Senior Vice President Thomas R. Stone Senior Vice President Information Systems Retail Banking Carl L. Ricker Senior Vice President Retail Lending Scott E. Hartlaub L. John Hicks Dennis R. Hollinger Michelle N. Paulnock R. Mark Purdy Lauren L. Shutt Thomas A. Ritter President & Chief Executive Officer David W. Cathell Executive Vice President, Treasurer & Chief Financial Officer First Vice Presidents Karen B. Arthur Barry C. Dillman Kathy S. Hansel Vice Presidents Mark P. Bernier Cara Lynn Clabaugh David W. Deaner Claire M. Forbush Stephen C. Hawbaker Vickie L. Hoffheins Gary R. Holder Leslie R. Horn Helen A. Jahn John E. Kashner Beth W. Lesko Debra T. Little Jill M. McNeil Donald C. McVay Scott A. Miller Jeffrey A. Pottorff Edward C. Price, Jr. Gary W. Rappoldt Wendy D. Roth James E. Showvaker Debra T. Sites Rhonda L. Winterstein Merle J. Zehr Christina D. Ziser Assistant Vice Presidents Brian T. Adair Kevin L. Cook Andrée V. Dennis Carolyn M. Dull Kim D. Elmo Kimberly S. Flickinger Jacqueline A. Grasley Carolyn E. Groft Edward J. Groft Barbara D. Guise Jane E. Gwyn William A. Kauffman Susan R. Lang George F. Marguglio Laura L. McCusker Celeste M. Miller Shelby L. Pentz Karen J. Redding Susan M. Saylor Christine R. Settle Jody M. Shealer Lisa A. Smith Jeffrey B. Stambaugh Tina M. Steckler Ruby L. Sullivan Russell Insurance Group, Inc. Frank C. Russell, Jr. President & Chief Executive Officer Daniel J. Coughlin Vice President David W. Cathell Vice President & Treasurer Lynda L. Glass Vice President & Secretary 2 01 3 A N N UA L R E V I E W | 1 1 O FFI C E LO C ATI O N S ACNB Bank Arendtsville Arendtsville Office 101 Main Street Dillsburg Dillsburg Office 3 Tristan Drive Lincoln Square Office 2 Chambersburg Street McSherrystown McSherrystown Office Gettysburg, PA 17325 369 Main Street Arendtsville, PA 17303 Dillsburg, PA 17019 McSherrystown, PA 17344 Bendersville Bendersville Office East Berlin East Berlin Office 101 North Main Street 1677 Route 194 North Bendersville, PA 17306 East Berlin, PA 17316 Biglerville Biglerville Office Fairfield/Carroll Valley Fairfield/Carroll 3459 Biglerville Road Valley Office Biglerville, PA 17307 4910 Fairfield Road Cashtown Franklin Township Drive-Up 10 High Street Fairfield, PA 17320 Gettysburg Adams Commerce Cashtown, PA 17310 Center Office 100 V-Twin Drive Gettysburg, PA 17325 Chambersburg Chambersburg Loan Office 946 Lincoln Way East Chambersburg, PA 17201 North Gettysburg Office 675 Old Harrisburg Road Gettysburg, PA 17325 West Gettysburg Office 545 West Middle Street Gettysburg, PA 17325 Hanover North Hanover Office 1127 Eichelberger Street Hanover, PA 17331 South Hanover Office 865 Baltimore Street Hanover, PA 17331 Littlestown Littlestown Office 444 West King Street Littlestown, PA 17340 New Oxford New Oxford Office 318 Lincoln Way East New Oxford, PA 17350 Newville Newville Office 39 Carlisle Road Newville, PA 17241 Spring Grove Spring Grove Office 221 North Main Street Spring Grove, PA 17362 York Springs York Springs Office 202 Main Street York Springs, PA 17372 Russell Insurance Group, Inc. Westminster Office 2526 West Liberty Road Germantown Office 19500 Amaranth Drive, Suite C Westminster, MD 21157 Germantown, MD 20874 Russell Insurance Group, Inc. riginsurance.com Toll Free 1.800.289.4097 CO NTAC T I N FO R M ATI O N ACNB Bank acnb.com acnbbusiness.com Customer Contact Center Toll Free 1.888.334.ACNB (2262) 24-Hour Telephone Banking Line Toll Free 1.888.338.ACNB (2262) 1 2 | N E W H O R IZO N S B EC KO N Forward-Looking Statements In addition to historical information, this document contains forward-looking statements. Examples of forward-looking statements include, but are not limited to, (a) projections or statements regarding future earnings, expenses, net interest income, other income, earnings or loss per share, asset mix and quality, growth prospects, capital structure, and other financial terms, (b) statements of plans and objectives of management or the Board of Directors, and (c) statements of assumptions, such as economic conditions in the Corporation’s market areas. Such forward-looking statements can be identified by the use of forward-looking terminology such as “believes”, “expects”, “may”, “intends”, “will”, “should”, “anticipates”, or the negative of any of the foregoing or other variations thereon or comparable terminology, or by discussion of strategy. Forward-looking statements are subject to certain risks and uncertainties such as local economic conditions, competitive factors, and regulatory limitations. Actual results may differ materially from those projected in the forward-looking statements. Such risks, uncertainties and other factors that could cause actual results and experience to differ from those projected include, but are not limited to, the following: the effects of new laws and regulations, specifically the impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act; impacts of the new capital and liquidity requirements of the Basel III standards and other regulatory pronouncements, regulations and rules; ineffectiveness of the business strategy due to changes in current or future market conditions; future actions or inactions of the United States government, including effects of short- and long-term federal budget and tax negotiations and a failure to increase the government debt limit or a prolonged shutdown of the federal government; the effects of economic deterioration and the prolonged economic malaise on current customers, specifically the effect of the economy on loan customers’ ability to repay loans; the effects of competition, and of changes in laws and regulations on competition, including industry consolidation and development of competing financial products and services; interest rate movements; difficulties in integrating and operating distinct business operations, including information technology difficulties; challenges in establishing and maintaining operations in new markets; volatilities in the securities markets; and, slow economic conditions. We caution readers not to place undue reliance on these forward-looking statements. They only reflect management’s analysis as of this date. The Corporation does not revise or update these forward-looking statements to reflect events or changed circumstances. Please carefully review the risk factors described in other documents the Corporation files from time to time with the Securities and Exchange Commission, including the Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q. Please also carefully review any Current Reports on Form 8-K filed by the Corporation with the Securities and Exchange Commission. 16 LINCOLN SQUARE • PO BOX 3129 • GETTYSBURG, PA 17325 • ACNB.COM 

Continue reading text version or see original annual report in PDF format above